Hi HNers,
I have a question regarding startup equity. If I am offered a job from a startup that recently raised a huge round, can I negotiate for equity at a previous valuation? Or that is just same as asking for more equity?<p>thanks!
Generally, you can only be offered equity (I assume you mean options on common stock) at a current valuation of the common stock. If the company just raised a round, they will have a new valuation of the common stock (a 409a) valuation.<p>If the company offered you options at a different (lower) valuation, they would have to book the difference as a compensation expense to you. While it's technically possible, they are unlikely to want to do that.<p>Option backdating (getting equity at a previous valuation) is discussed helpfully here:
<a href="https://en.wikipedia.org/wiki/Options_backdating" rel="nofollow">https://en.wikipedia.org/wiki/Options_backdating</a>
Due to accounting/tax rules, "qualified incentive" options are required to be priced at "fair value".<p>It's better for you to just ask for more equity.<p>However, realize that equity is usually worthless. If they already raised a lot of money, you're probably only going to get a tiny slice. If the equity is a factor in your decision to accept the job or not, you probably shouldn't.<p>Remember that the recent investors probably got a liquidation preference, which means they need to eventually sell for a LOT MORE than the price of their last round, or common shareholders may get nothing.